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Gulliford seeks City Council control over $13 million settlement from failed Shipyards venture

Gulliford wants to limit use of the money to capital projects, not operating costs of city government

City Council President Bill Gulliford’s tenure as council president will end with one more tug-of-war with Mayor Alvin Brown over the city budget.

This time, it involves legislation filed by Gulliford to shift the $13 million settlement from the failed Shipyards development into an account controlled by the City Council.

The infusion of settlement money has already sparked requests from the Downtown Investment Authority to use it for downtown redevelopment. City Council member Kimberly Daniels filed legislation last week seeking $500,000 for summer youth programs.

Brown hasn’t said how he wants to use the money. He is putting together his proposed 2014-15 budget, which he will present to the City Council in mid-July. Gulliford’s bill could come up for a vote June 24.

Gulliford said by moving the $13 million into the City Council account, the legislation will ensure all the money goes solely toward catching up on needed capital improvements — a category that covers construction projects such as roads, drainage, and parks. Gulliford said the money shouldn’t be used to balance the budget when it comes to day-to-day operating expenses of city government.

“I think it should stand alone for consideration,” Gulliford said of the settlement proceeds. “I don’t want it to be sucked into the budget calculations for next year. It should be for capital projects, period. This is one-time money.”

Brown opposes Gulliford’s legislation.

City officials should “obtain final guidance on how the money can be invested, see what next year’s budget picture looks like, and then make a wise decision to ensure that taxpayers get the best return on their investment,” said Chris Hand, Brown’s chief of staff.

Gulliford, whose one-year term as council president ends at the end of June, and Brown have had a running disagreement about budget matters.

Most recently, Gulliford spearheaded legislation extending the 6-cent local gas tax. Extending the gas tax will enable the Jacksonville Transportation Authority to undertake $100 million in road construction, while giving City Hall a recurring source of money for street resurfacing and construction of sidewalks and bike paths.

Brown opposed extending the gas tax, saying the City Council could have waited until 2016 to decide on renewing it.

Gulliford backed the City Council’s vote last year to increase the property tax rate. Brown let that budget become law without his signature. For the fiscal year starting Oct. 1, Brown’s office has said the mayor will use the current tax rate.

The city has some breathing space for next year’s budget because the property tax base is growing.

On top of that positive trend, the city recovered $13 million in the bankruptcy filed by Crescent Resources and its Jacksonville-based subsidiary LandMar, which ran into financial problems while attempting a big development planned for the Shipyards site on the downtown riverfront.

The City Council voted May 13 to put the $13 million into the general fund with the understanding the city would decide later how to use it. Because the city issued tax-exempt bonds to pay for work at the Shipyards site, any use of the settlement proceeds must meet Internal Revenue Service regulations.

Gulliford and Assistant City Council Auditor Janice Billy said based on a conference call they had last week with the law firm advising the city on bond matters, the $13 million currently cannot be used for operating expenses of the city.

They said the reason stems from city administrators putting the $13 million into an account designated as the Shipyards settlement account. If administrators had instead put it in a miscellaneous general fund account, then the city would have had flexibility to use the money for capital projects or daily expenses, Billy said.

Hand said the mayor’s office expects the city will have flexibility on how the money is spent. He added that when the council passed legislation in May to deposit settlement proceeds, that bill said the council intended to “provide the city with the most flexibility in the expenditure of these funds.”